WestJet aims for turnaround
TORONTO — WestJet Airlines Ltd. aims to lift its lagging profits over the next four years, predicting earnings growth of 40 per cent on a per share basis between 2019 and 2022 after a turbulent year that saw profits plunge.
Soaring fuel costs, labour unrest, and steep competition at home and abroad caused Canada’s second-largest airline to incur its first loss in 13 years during the second quarter, followed by a steep year-over-year drop in the third quarter — which nonetheless bounced back into the black.
Revenues and efficiency were “nowhere near” the airline’s potential, chief executive Ed Sims said at a WestJet investor conference in Toronto Tuesday.
Strong demand, more branded fares and higher ancillary fees will boost its revenue per available seat mile to between two per cent and four per cent in 2019, Sims said.
Branded fares bundle various perks — such as pre-reserved seats and baggage checks — at a higher total price.
Earlier this year, the airline launched transatlantic service on the first three of an expected 10 Boeing 787 Dreamliner aircraft in a bid for business passengers that challenges Air Canada’s transatlantic dominance.
A crowded domestic market resulted in “over-supply” and weaker revenue per available seat mile — a key industry metric that divides operating income by passenger carrying capacity.
A freshly expanded Flair Airlines, soonto-launch Canada Jetlines Ltd., and Air Canada’s low-cost Rouge are all crowding the budget airspace that WestJet has flown into with its four-month-old, ultralow-cost Swoop.
The market saturation means WestJet will “step back from profitless volume,” Sims said.
The airline aims to grow passenger capacity by between 6.5 per cent and 8.5 per cent next year, mainly through three Dreamliners embarking on non-stop service from Calgary to Dublin, Paris and London’s Gatwick Airport this spring.